Now at its strongest point in the recovery, the economy grew by nearly 3.0 million jobs in 2014, pushing unemployment to its lowest level since the third quarter of 2008. As a result, markets across the country recorded expansionary activity as corporate confidence grew along with demand for office space. Annual net absorption totaled 54.7 million square feet driving vacancy to 15.6 percent—its lowest point since 2008—a trend expected to continue over the next 24 months.
While challenges exist ahead, including historically low labor force participation and the recent fall in oil prices, forecasts for 2015 and 2016 across the U.S. project the highest growth in more than a decade.
- Swelling corporate confidence and economic growth fueled net absorption of 54.7M s.f. in 2014 (36.7 percent increase from 2013), with 2015 forecast calling for growth to uptick by another 25 percent.
- Total vacancy declined 15M s.f. from year-end 2013—from 16.6 percent to 15.6 percent—its lowest point since 2008, with vacancy to dip close to 14.0 percent by early 2016.
- Rents increased across most U.S. markets in 2014, fueled more by a resurgent Class B sector in the past six months. Overall rents are forecasted to jump +/- 15.0 percent over the next 24 months.
- The construction pipeline increased by 68.4 percent year-over-year, from 47M s.f. to 79.6M s.f. in Q4 2014, with large upticks in groundbreakings creating tenant leverage again in 2016 and 2017.
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